Carol Cowan,
vice-president product management and marketing at Fiserv, tells
Douglas Blakey that social media websites have become such an
integral part of consumers’ everyday lives that banks can no longer
ignore them. She argues they offer a powerful way for lenders to
connect with customers of all generations.
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Fiserv, a leading
provider of information management and electronic commerce systems
for more than 16,000 banks, credit unions and thrifts around the
world, is ideally placed to comment on current IT trends within the
banking sector.
In reviewing the year just
ending and looking ahead to 2011, Carol Cowan, vice president
product management and marketing at Fiserv, identified six
strategic themes.
- The increasing
empowerment of the consumer: “There is so much information
available to a consumer nowadays that banks have to assume that
every call it receives from a customer offers a buying opportunity.
Customer centricity is so key. If a banker does not really know who
the customer is, it is impossible to develop a proper pricing
strategy – you really are shooting blind,” said Cowan. - Customer
experience: “This has to delight the consumer. The bank
has to understand consumers’ channel preferences, and identify the
next best action for you. It could be about serving the customer as
quickly as possible, or it could be working out which additional
products to sell.” - Customer
growth: “Banks used to believe that the main aim was to
sign a customer up with the checking account and other products
would follow. Now, financial institutions must look at the
processes – focus on business optimisation.” - Risk and
compliance: “Such a huge and costly area – we have to get
this right for clients.” - Commercial
banking: “The lines are becoming blurred between consumer
and commercial banking. Retail banks looking to service the
mass-affluent sector must be able to serve the SME
sector.” - Operational
efficiency: “Not only is there is a crucial need for data
management, but banks must be able to understand the data and act
on it, in real time.”
In the US, Cowan argued banks
which have traditionally derived much of their retail banking
revenue from fees on transaction accounts, need to identify
alternative sources of income as a result of changes in overdraft
legislation.
“Free checking is dead. While
a number of customers will drop out of traditional banking markets,
there are opportunities for banks to retain such customers but
under a different class of account, such as prepaid,” said Cowan.
“For relationship pricing, or product bundling to work, banks must
understand the value of the customer. That is essential if you are
to price customers as an individual as opposed to pricing solely by
product.
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One big shift
identified by Fiserv in the past 24 months relates to the
increasing importance in IT-decision making within banks of
business development and marketing units. This is especially true
when banks have looked at investment in social media.
“Banks can use social media
to enhance their reputation with customers, especially in retail
banking, instead of just viewing social websites from a defensive
position.”
Research from Fiserv found
that more than half of those surveyed (57%) had connected to a
company or brand on a social networking site.
But despite the growing
number of consumers connecting with businesses and brands via
social websites, only about one in 10 consumers has connected with
their bank or credit union.
These connected consumers use
their financial institution’s social channel to:
- Receive information about
financial services (66%); - Receive information about
offers or promotions (32%); - Review other consumers’
opinions or advice or post reviews, complaints or questions (31%);
and - Conduct customer service
activities (30%).
Through social websites,
financial institutions and customers have the chance to engage in a
comfortable, low-pressure manner. By tailoring outreach with
different generational preferences in mind, financial institutions
can maximise the impact of social media to build stronger, deeper,
more loyal relationships.
High-income users ($100,000+)
are more likely to use social media networks to receive information
about financial services and to review other consumers’
opinions.
Based on these findings,
there is scope for financial institutions to include financial
research and advice in social media communications.
“Leveraging social networks, financial institutions can
foster deeper, more personal relationships, resulting in more
profitable and loyal customers,” concluded Cowan.
